Robinhood Sues NJ and Nevada: Says CFTC Regulates Event Contracts on Sports

Robinhood offers event contracts tied to professional and college football results through KalshiEx LLC ("Kalshi"), a CFTC-regulated derivatives exchange. In the Complaints, Robinhood argues that applying state gambling laws to federally regulated event contracts is inconsistent with the uniform system for the regulation of commodity derivatives that Congress created under the Commodity Exchange Act.

In the first Complaint, filed in the U.S. District Court for the District of New Jersey, Robinhood alleged that the state regulator:

• Exceeded its authority: Robinhood argued that the CEA grants the CFTC sole jurisdiction over futures, swaps, and commodity options (which include event contracts) traded on designated contract markets, leaving no role for New Jersey to regulate trading on Kalshi’s exchange;
• Defied existing federal rulings: Robinhood highlighted that New Jersey barred enforcement against Kalshi on identical grounds in KalshiEx LLC v. Flaherty and maintained that applying state law to the firm—as a CFTC-registered futures commission merchant providing customer access to Kalshi—would undermine that ruling;
• Threatened irreparable harm: Robinhood claimed it faces immediate risk of civil and criminal penalties, reputational damage, and customer loss, harms which cannot be repaired through monetary recovery because sovereign immunity bars damages; and
• Undermined market integrity: Robinhood maintained that only injunctive relief can ensure consistency with federal law, protect investors, and prevent the patchwork of conflicting state regulations Congress expressly intended to preempt.

Robinhood is seeking (i) a permanent injunction prohibiting enforcement of these statutes and constitutional provisions against its facilitation of event contracts, (ii) a declaratory judgment that such enforcement violates the Supremacy Clause, and (iii) any further relief the Court deems just and proper.